America and China: The Eagle and the Dragon Part two: Requiem for a dream

The Telegraph has a very sad piece on the decline of Detroit. It's part of a series. Part 1 is here. Part 3 isn't out yet.

It has become a commonplace to describe Detroit as the sick city of America, but it is sobering to reflect on just how long this has been so. Browsing the internet before arriving in the city I came across an article in Time magazine headlined 'Decline in Detroit', lamenting the rising unemployment rate, the rate of migration from the city and its declining tax base. 'Blight is creeping like a fungus through many of Detroit's proud, old neighbourhoods,' it read. The article was dated 1961.

Detroit owed its boom years to Henry Ford's moving assembly line. Between 1910 and 1940 the population of the city swelled with an influx of both blacks and whites from the South to work in the auto factories. During the Second World War, Detroit became 'the armoury of America', churning out vehicles and arms for the war effort.

Then came the long, slow decline. Racial tension had always been part of the city's make-up. Discrimination in housing and a viciously racist police force led to riots in 1943 in which 34 people died and more than 1,800 were arrested. During the 1940s and 1950s white residents erected a concrete wall, 6ft high and a foot thick, along the perimeter of Eight Mile Road to separate themselves from potential black neighbours.

The construction of the Davison Expressway, America's first freeway, which opened in 1944, paved the way for a series of Interstate freeways that carved through and around the city, destroying old residential neighbourhoods and opening up the suburbs to the white middle-classes. In 1967 Detroit exploded in another race riot, in which 43 people died and more than 7,000 were arrested, hastening 'white flight' from the city. In 1950 Detroit was America's fourth largest city, with a population of nearly two million. The population is now less than 900,000, 82 per cent of which is Afro-American.

This exodus of people and commerce to the suburbs resulted in a massive shift of capital, and a declining tax-base in the inner-city. While Oakland County, the wealthy suburb to the north, is one of the most affluent areas in America, Detroit itself is the country's most impoverished city - not only a synonym for urban decay, but a repository of all of America's most intractable problems: the decline of manufacturing and the threat of competition from overseas; racial tensions; a housing market decimated by the subprime mortgage crisis. More than a third of Detroit's residents live at or below the federal poverty line. Ironically, in the city that gave America the automobile, more than a fifth of households do not own a car.

The woes of Detroit have been inextricably linked to the woes of the car industry. Forty years ago, Detroit's 'Big Three' - General Motors, Ford and Chrysler - manufactured 75 per cent of all the cars sold in America. Fifty per cent were built by GM alone; now the Big Three cannot achieve that figure between them. GM has 23.5 per cent of the market, Ford less than 15 per cent. Sales and jobs have, quite literally, gone south - to Toyota, Honda and Hyundai plants in Tennessee, South Carolina, Alabama and elsewhere. Since 1999 Michigan has lost more than 120,000 jobs in the auto industry with manufacturers attempting to 'right-size' (in the preferred euphemism) their workforce and parts suppliers cutting back or going bankrupt.